Industry backs government's stand on Maldives contract

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Last Updated: Tue, Dec 04, 2012 14:50 hrs

New Delhi, Dec 4 (IANS) Two leading Indian industry groups Tuesday supported the government's stand against the unilateral decision of the Maldives' government to scrap an airport management contract with an Indian infrastructure major.

According to the Confederation of Indian Industry (CII), it fully supports the government on the steps taken in the wake of the termination of the concession agreement for development and operations of Male airport to GMR-backed consortium GMR Male International Airport Limited (GMIAL).

"It is extremely important for all the concerned parties to respect the sanctity of the concession agreement and abide by the provisions provided therein to resolve any dispute within the stipulated legal framework," said Chandrajit Banerjee, director general, CII.

The government had said Monday that it has frozen aid to the Maldives as its government has decided to take control of the international airport despite a Singapore court staying the suspension of the contract given to India's GMR-led consortium.

Upset at the Maldives government's attitude, India has put on hold $25-million budgetary commitment to Male, said reliable sources Monday.

This comes after the Singapore High Court, which is acting as an arbitrator in the issue between the GMIAL and the Maldives government, stayed the decision taken by its cabinet last week to terminate the $500 million contract awarded to GMIAL.

However, the Maldives government chose to defy the court order. "We will continue the airport takeover and hopefully next Saturday onwards MACL (state-controlled Maldives Airport Company Ltd.) will be running the airport," the Maldives' defence minister and acting transport minister Mohamed Nazim told reporters in Male Monday.

Meanwhile, Associated Chambers of Commerce and Industry of India (Assocham) has slammed the Maldives government and said that the latest developments would shake the confidence of investors.

"It's high time that the government of India should activate their diplomatic relation to convince the Male government not to terminate the concession agreement," Assocham said.

The GMR Group had termed the cancellation of the contract as unlawful and is planning to take legal action against the Maldives government for scrapping its investment of more than $500 million in the project.

Several Indian banks like Axis Bank, Indian Overseas Bank and Indian Bank have contributed about $368 million to the project. This is also the single largest Indian foreign direct investment in the Maldives.

The project was awarded to the GMR Group through an international tender advertised by the Maldives government under the tenure of former president Mohamed Nasheed, who was ousted in February 2012.

The Maldivian cabinet has also directed GMIAL to hand over the airport within seven days to MACL. It had also asked GMR to vacate and remove all property from the airport within 30 days.